MIAMI – A lawsuit involving the estate of a deceased woman recently took an interesting turn when a bank and an insurance company were granted in part and denied in part summary judgment motions regarding life insurance policies on the woman.
U.S. District Judge Marcia Cooke, on the bench of the U.S. District Court for the Southern District of Florida, issued a 28-page ruling March 29 granting in part and denying in part summary judgment motions in the lawsuit filed by the estate of Phyllis Malkin against Wells Fargo Bank NA and Berkshire Hathaway Life Insurance Company of Nebraska.
The case involves life insurance called stranger-originated life insurance (STOLI) sold to Malkin through Florida insurance brokerage company Simba which then sold STOLI policies from another company called Coventry.
Coventry then sold the policies to defendants.
As stated in the ruling, "In 2005, Phyllis Malkin and her husband Paul were retired and living in Aventura, Florida, when an acquaintance referred them to Simba." After some hesitation, Malkin signed up with Simba, which obtained her permission to access her medical records in order to calculate the amount of the benefits of the policies.
"After receiving approval from American General Life Insurance Company (AIG) and Sun Life, stating that they would issue policies on Ms. Malkin’s life, Simba confirmed that Coventry was interested in the policies. Eventually, three separate policies were taken out on Ms. Malkin’s life: the $4-million AIG policy at issue here; the $5-million policy at issue in Sun Life; and another $4-million policy procured through a separate entity called Sail Funding Trust II. Ms. Malkin, who until 2005 had not been in the market for life insurance, thus obtained a total of $13 million in coverage," the ruling said.
After forming a trust and defaulting on payments, Malkin relinquished the policies and Coventry sold the policies to U.S. Bank, which later sold the policies to Wells Fargo, which also sold the same policies to Berkishire Hathaway.
Malkin died Sept. 13, 2014.
On Aug. 17, 2017, the estate filed the suit seeking to recover the amounts of the policies. Wells Fargo filed for summary judgment and Berkshire Hathaway was added to the suit on an amended complaint
In her ruling, Cooke granted summary judgment regarding the claims that the trust is guided by Delaware laws, that statutes of limitations did not affect the claims, that Malkin did not relinquish the policies and that the estate is entitled to recover.
U.S. District Court for the Southern District of Florida Case No. 1:17-cv-23136-MGC